Coinbase’s legal battle with the SEC has taken another turn. Coinbase replied to the SEC’s petition against their interlocutory appeal, a crucial milestone in this high-stakes regulatory issue.
Coinbase asked the US court on April 12 whether an investment contract may exist without post-sale responsibilities. The exchange deems this a “controlling question of law” in their SEC dispute.
The SEC argued that the Howey Test in securities regulation has long been sufficient, thus the court need not certify this appeal. According to the SEC, no court has required a post-sale contract under this standard.
Coinbase claimed in a May 24 Memorandum of Law that the interlocutory appeal tackles a unique issue: no appellate court has considered whether a digital asset transaction without post-sale responsibilities is a “investment contract” under the Howey Test.
Coinbase said the SEC avoided the major legal challenge by concentrating on the Howey Test for bitcoin transactions rather than their worry.
Coinbase stressed the possible significance of their appeal on their SEC lawsuit. A positive verdict may invalidate almost 70% of the SEC’s allegations, according to the exchange’s attorneys.
They said, “The SEC has mostly subpoenaed Coinbase’s platform and Prime services, not the staking program. Interlocutory review might reject a long discovery procedure and token ecosystem-focused trial.”
By June 6, 2023, the SEC accused Coinbase with being an unauthorized securities exchange, broker, and clearing agency. Since Coinbase is the biggest US exchange, this lawsuit might dramatically impact US crypto rules.
SEC skipped the Howey test for securities, thus Coinbase filed an interlocutory appeal. The exchange claims FIT21 exposes the US SEC’s overreach.
